Egypt-Russia Arms Deal: An Unlikely Permanent Replacement for U.S. Security Assistance

Recent high-level meetings between Russian and Egyptian officials, most notably Foreign Ministers Sergey Lavrov and Nabil Fahmy, have reportedly resulted in a preliminary arms deal signifying a resumption of military cooperation between the Cold War-era partners. Last month’s partial suspension of U.S. aid to Egypt has been criticized by many who believe the Egyptian government would look elsewhere for security assistance. But it would be wrong to assume the Egyptian military’s outreach will undermine U.S. efforts to support Egypt’s transition to democracy.

Since the partial suspension, many have argued that aid to Egypt could be “demonstrably and easily” replaced by other states. Some have put forth the argument that Egypt is looking for a “new patron,” while other commentators have mistakenly claimed that Egypt has a historical tendency to abruptly shift alliances if foreign aid from their current partner drops aid to an insufficient amount. These arguments, however, fail to grasp the depth and nuance of U.S.-Egypt relations. Several factors could complicate the Egyptian government’s outreach, including interoperability, consistency, and financing.

Interoperability, or the ability of different systems to work together, is essential to any security assistance relationship that involves arms sales, maintenance, and training. The need for interoperability in part explains the sense of inertia that tends to accompany arms deals between states. The more equipment an importing state acquires, the more important preserving the relationship between the original exporting state becomes; equipment maintenance, additional training, and upgrades are all ongoing needs that the exporting state can best provide. Interoperability has become even more important over time as integrating technologically advanced computer systems has become more difficult. Recent tension between Turkey and NATO, in response to the Turkish government’s decision to purchase a missile defense system from China, provides an illustrative example of the need to balance interoperability with efforts to diversify security partnerships.

The most significant components of the Egyptian military’s hardware collection — F-16 Fighting Falcon fighters, M1 Abrams tanks, and Boeing AH-64 Apache attack helicopters — are built and serviced by U.S. defense companies. The vast majority of Russian-made hardware employed by the Egyptian military is from the Soviet era, save only a few modern helicopters. Moreover, ongoing maintenance and repairs have been especially critical for the Egyptian Air Force as Egyptian pilots have one of the highest rates of F-16 crashes in the world. Presently, U.S. defense contractors provide much of the fleet’s maintenance as Egypt has failed to develop a significant in-house, independent capability for plane repairs.

The second factor is consistency, a significant feature of the U.S.-Egyptian security relationship. The U.S. has provided Egypt with $1.3 billion each year since 1989, and the total bilateral assistance amount since 1948 has exceeded $70 billion. This flow of hardware, training, maintenance, and cash has been a cornerstone of U.S. policy in the Middle East. Tied to the Camp David Accords and the 1979 peace treaty between Israel and Egypt, the aid also ensures U.S. priority access to the Suez Canal. In short, the package is unique in that it is written annually into defense appropriations bills, rather than ad hoc arms deals. A previous post discussed how regional partners—particularly Saudi Arabia, the United Arab Emirates, Kuwait, and Qatar—have tried to supplant U.S. funding by dwarfing it in terms of raw contributions. However, Gulf States have not always proven reliable in following through with pledges.

Finally, the United States has developed a unique financing relationship that allows Egypt to “benefit from certain aid provisions that are available to only a few other countries.” Egypt “received almost a quarter of all U.S. Foreign Military Financing (FMF) funds” in fiscal year 2012. FMF provides security assistance monies that the government of the recipient state is obligated to pay to U.S. defense contractors in return for hardware. This differs from other types of arms sales, namely Foreign Military Sales (FMS) and Direct Commercial Sales (DCS), in which the recipient state pays out of pocket or with loans for the material they receive. Historically, Egyptian purchases have been made through a system of “cash-flow financing,” whereby payments for defense purchases can be made gradually over time. Cash-flow financing requires that the Department of Defense pay defense contractors for products and services rendered up front, allowing Egypt to provide reimbursements much later. Other countries are unlikely to match this “buy now, pay later” system of financing.

There are substantial gaps between rumors of the proposed sale and the actual deal that Egypt completed with Russia. What was originally rumored to be a $2 billion package including hardware, such as combat helicopters and fighters, has ultimately turned out to be a much more modest arrangement involving the sale of a missile defense system. Reports indicate that the somewhat underwhelming final agreement may well be a result of what Russian business leaders euphemistically called “funding problems.” Ultimately, interoperability, consistency, and favorable financing will make it difficult for the Egyptian government to replace U.S. aid and arms transfers with purchases from other countries like Russia. Nonetheless, per policy of the Obama administration, the Egyptian government will need to enact concrete measures to signify progress on their “roadmap to democracy,” including a “national referendum on an amended Constitution and parliamentary and presidential elections by next spring.” Ensuring that these benchmarks are clearly identified for Egyptian leaders will be key to reforming U.S. security assistance policy to support Egypt’s transition.

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